The Central Bank of Ireland (CBI) recently published its
2017 annual report. It is essential reading for Irish finance
services regulatory advisers, and for any entity with a
business presence in Ireland in the banking and financial
Three developments are worthy of note: first, CBI's focus on
regulatory issues arising from Brexit; second, the importance
of an appropriate regulatory culture in banks and financial
services providers; and third, an enhanced approach to
enforcement and supervision focusing on senior management
Brexit poses important challenges for CBI and for the
financial services sector in Ireland in general. It is expected
that there will be a substantial influx of institutions looking
to use Ireland as a passporting hub for Irish and EU/European
Economic Area business when the UK leaves the EU in March 2019.
CBI's key objective is to strike the appropriate balance
between maintaining an appropriate level of supervision, and
not unduly inhibiting sectoral growth and expansion. Staffing
is also an issue discussed in the annual report: the CBI has
substantially increased its workforce, but indicates that there
is scope for attracting further talent.
Following on from public statements by the Financial
Stability Board, the CBI has signalled that the critical review
and assessment of the regulatory culture in banks and other
financial service providers is at the top of its agenda.
Culture in this context is difficult to define precisely: it
clearly encompasses the business' approach to risk, compliance
and governance in general. Key indicators here include formal
arrangements and policies. However, the CBI will also be
vigilant for soft indicators such as the business' overall
approach to risk assessment and pre-empting regulatory crises.
The CBI will expect firms to be proactive in anticipating
problems before they arise.
Finally, it seems clear that the CBI will focus on senior
management responsibility for regulatory compliance. Although
Ireland does not (yet) have an equivalent to the UK senior
managers' regime, the CBI has responded positively to law
reform proposals in this area. It is engaged in a long-running
and continuing inquiry into the management of a failed building
society. The conduct of senior managers and personal
responsibility for regulatory breaches will be key themes of
the CBI's regulatory and enforcement approach from now on.